In the aftermath of the 2007-09 global financial crisis, advanced countries created abundant liquidity through expansionary monetary policies. This enabled many developing countries to borrow from the global market at exceptionally low interest rates to support their infrastructure, social programmes and responses to economic shocks. However, the era of inexpensive money ended when the world was hit by the Covid-19 pandemic and the Russia-Ukraine war. These events caused commodity price shocks worldwide, fuelling inflation. This initiated sharp monetary tightening in 2021-22 as inflation reached its peak in many economies.
During the 2023-25 period, global inflation moderated but still remained above target levels in many countries. In…